We ran our Dorset ewes with the ram year round. The ram was separated from the ewes for the first 2 months after they lambed then the ewe and her lambs were turned back into the field with the flock. We castrated the ram lambs around 1-2 months, and sent them to butcher around 5 months old (when they reached 110-120 lbs.). Our ewes and ram bred out of season and we had lambs about every 8-9 months. If you do not want your ewes to breed year round, separating the ram would be best.
We did not have too many ewe lambs born but the one or two we had we let run with the flock. For some reason, even in with the ram our ewe lambs did not lamb until they were around 15-18 months old. We did buy a 6 month old ewe lamb one year that had been accidently bred unbeknownst to either the breeder or ourselves. She lambed at 10 months old. That is the earliest we ever had a ewe lamb.
We now have 2 rams and I separate them from the ewes unless they are actively breeding. I use a breeding harness with crayons to make sure I know the date they are bred, and separate the ewes into 2 breeding flocks. We now keep the ewe lambs separated from the rams until they are about 9-10 months old in order to get a little more size on them. The gestation is 5 months so that would make the ewe 14-15 months old when she lambs, giving her plenty of time to grow.
You can breed daughters to their sire with no problem. You can breed those daughters to that same sire as well. That generation of lambs must be terminal lambs. Breeding a 3rd generation will not be a good thing. The thing to remember about inbreeding is that you only want to do it if the animals are good quality specimens. Inbreeding doubles up on all the genetic qualities, both good ones and bad ones. If the animals are good quality you can get some excellent offspring, if they have faults you can get some really bad offspring.
If you breed your rams daughters back to him, and decide to keep daughters for your breeding flock, then make sure to change out your ram every 2 years.
Extra pens/pastures are great. You always need extra pens for quarantine, lambing, etc.